IIP growth likely to moderate in February, say experts

NEW DELHI: The country's industrial output growth in February is expected to fall below 6.8 per cent recorded in January even though there are some signs of pick-up in manufacturing and consumer goods, according to experts.

"As far as the IIP growth is concerned, it will remain flat in February this year and our projection is about 6.14 per cent for the month. Though, this is little less than the previous month, it is still a good number," Bank of Baroda Chief Economist Rupa Rege-Nitsure said.

The IIP number for the month of February is scheduled to be released tomorrow.

Growth in factory output growth, as measured by the Index of Industrial Production (IIP), grew 6.8 per cent in January 2012, over the previous month, mainly due to improvement in the manufacturing sector. It was, however, higher at 7.5 per cent in January, 2011.

"We have seen stronger activities in some core sectors (in February) like manufacturing and consumer goods in which the growth is likely to improve and touch more or less the same number," Rege-Nitsure added.

IIP growth has been revised upwards to 2.5 per cent in December, from the provisional estimates of 1.8 per cent.

However, D K Joshi, Chief Economist, Crisil said, "It is difficult to predict at this moment. However, there could a moderation in growth in some of the sectors."

Echoing similar views, ICRA Economist Aditi Nayar is of the view that the IIP growth could further decelerate to 4.2 per cent.

"Notwithstanding the improvement in core sector growth, IIP growth is expected to decelerate to around 4.2 per cent in February from the initial 6.8 per cent reading in the previous month. A lower PMI (Purchasing Managers Index) and easing export growth in the month point towards a moderation of manufacturing growth," she said.

According to the data released last month, output of the manufacturing sector, which constitutes over 75 per cent of the index, rose 8.5 per cent in January, compared to 8.1 per cent in the same month last year.

During the April-January period of 2011-12, the IIP growth stood at 4 per cent, as against 8.3 per cent in same period in 2010-11.